How to Take Legal Action Against a Contractor

Knowing how to take legal action against a contractor can be complicated. To avoid problems, do a lot of research before hiring a contractor.

By: Ilyce Glink and Samuel Tamkin

Q: I’d like to find out what legal actions I can take against contractors. I purchased a home that was a fixer-upper and hired a contractor to do the work, but most of the work was not finished. Then, I was sent an email from them that said a piece of equipment had broken and they did not have a clear date on when they would resume work to finish their work.

They lied to me. I saw them doing some work on the house next door and that owner told me that they had a job elsewhere that they were taking. A month later, they came and took care some of the items on the punch list, but did not do everything.

A: When you hire a contractor, you need to do quite a bit of research. You want to make sure the contractor has been in business for some time and you want to get references from him or her. You also want to check out whether the contractor has used his or her business name for a long time. While the contractor might tell you that he has been in business for 20 years, you want to know that he has been in business for 20 years using the same name.

If the contractor has used many names, he might have decided to stop using a name to start up under a different name because he had so many problems with prior homeowners. You also want to check out sites that can assist you in evaluating the contractor. Some of these sites can be like the Better Business Bureau and other contractor referral sites. In addition, you should probably try to use website search engines to see if any negative reviews popup about the contractor under his own name and under the business name. Finally, you might want to talk to your local government officials in the building department to see if they have had acceptable experiences with this contractor.

You also should become familiar with some of the laws in your state regulating home repairs and contractors. You might be surprised. Some states have passed laws that make it a crime for a contractor to fail to comply with the terms of their contracts. Usually, contract disputes don’t cross the line from civil courts to criminal courts, but when contractors fail to perform under their contracts, or take the money and run, you may have recourse under your contract or under the laws of your state.

Going down this route may involve taking legal action to hire an attorney that has experience in dealing with and chasing contractors. It would be at this point that you have to make a couple of decisions.

The first question is to assess how much is at stake. You might have had $20,000 of work done on your home and the contractor failed to complete the last $500 of work. But it wouldn’t be worth the time and money you’d spend to hire an attorney to chase the contractor over the $500 when could simply hire someone else to finish the work.

(To make yourself feel better in this scenario, you could also file a complaint with the Better Business Bureau and with other contractor reviewer websites. You’d want to warn other homeowners of the problem you’ve had with the contractor.)

If, however, you have $10,000 dollars of work left to be finished in your home, you might want to hire an attorney and sue. Some states will allow you to recover your damages from the contractor as well as any attorney’s fees you incur. Keep in mind that you’d better make sure that the contractor has assets to pay you if you win. You won’t want to find out that you owe your attorney a large sum of money, then find out that the contractor has effectively not finished not only your job but failed to finish many other jobs and has no money to pay anybody.

If your contractor used your money to pay for other jobs and effectively ran off your job and others, you may be able to file a police report against the contractor and, depending on how many people are affected by the contractor’s failure to complete work on homes, your state attorney general might get involved. You can imagine how messy and time consuming putting this case together would be.

You should review where things stand on your job and then you can decide how to proceed and whether you want to hire an attorney to help you out.